Continuing our series on relatively obscure areas of law, this post is going to focus on gambling law — specifically, the laws related to daily fantasy sports leagues. This topic has been in the news a lot fairly recently, and it has led to some high-profile class actions. Also, choosing this topic gave me a relatively easy way to mention the fact that I’m in the playoffs of both of my fantasy leagues. Yup, I’m kind of a big deal.
Anyway, back to the topic at hand, daily fantasy sports leagues (or weekly, in the case of baseball) are a subset of fantasy sport games. In the more traditional fantasy sports leagues, you “draft” a team of players and your success in the league is predicated on those players performance over the course of the entire season. Daily sports leagues, on the other hand, allow people to draft a team of individuals for a shorter time period, such as a week or a single day. Generally, participants in a daily league pay an entry fee and then, depending on their performance, may win a share of the overall pool of money (of course, some of that pool goes to the service provider—the house always wins, after all).
As you might imagine, there is some debate over whether or not participation in these types of leagues constitutes gambling. Some argue that the unpredictability of athletes’ performances means that players are essentially wagering on a particular athletes performance in a given game—chance predominates over skill. Contrasting this view, others assert that participation in daily leagues requires skill and knowledge of the sports; consequently, participants are not gambling because chance does not predominate over skills (see the Unlawful Internet Gambling Enforcement Act).
If you’ve watched TV this year, you’ve probably seen commercials for daily fantasy leagues. The two main service providers are DraftKings and FanDuel. And they advertise everywhere. Honestly, it’s getting a little excessive. Given the increased presence and popularity of these two providers, there has been an increase in scrutiny on the legality of daily fantasy leagues. Both Nevada and New York have determined that daily fantasy leagues constitute illegal gambling under their state laws. DraftKings and FanDuel have challenged the New York state order, and the litigation is ongoing.
Daily fantasy leagues are an interesting and burgeoning area of legal development. If you’re interested in either Internet law or gaming law, you should keep tracking the changes in New York’s jurisprudence and the ongoing investigations into the legality of DraftKings and FanDuel.